NVIDIA Doubles Revenue in a Year, But Can It Sustain the Momentum?
NVIDIA Corporation (NASDAQ: NVDA) has reported its financial results for the third quarter of fiscal 2025, achieving record-breaking revenue of $35.1 billion. This represents a 17% increase over the previous quarter and a staggering 94% growth compared to the same quarter last year.
The company’s revenue growth continues to be primarily driven by its Data Center segment, which posted $30.8 billion in revenue, up 17% quarter-over-quarter (QoQ) and an impressive 112% year-over-year (YoY). This segment alone accounted for nearly 88% of NVIDIA’s total revenue, underscoring its dominance in the AI infrastructure market.
In comparison, NVIDIA’s Gaming segment showed more modest growth, with revenue of $3.3 billion, representing a 14% QoQ and 15% YoY increase. Automotive revenue demonstrated the highest relative growth at 72% YoY, reaching $449 million, although its contribution to total revenue remains small. Professional Visualization revenues climbed 17% YoY to $486 million, while still recovering from softer demand in previous quarters.
Gross margin for the quarter was 74.6%, a slight decline from 75.1% in the prior quarter, although up from 74.0% a year ago. Non-GAAP gross margins followed a similar pattern, falling from 75.7% last quarter to 75.0% this quarter. The company attributed this decline to the higher costs of ramping up production for its next-generation Blackwell GPUs, as well as increased investments in infrastructure to meet soaring AI demand.
Operating expenses have risen sharply, reaching $4.3 billion for the quarter on a GAAP basis, a 9% QoQ and 44% YoY increase. Research and development expenses were a significant driver of this growth, climbing 48% YoY to $3.4 billion as NVIDIA continues to prioritize innovation in AI, gaming, and data center solutions. Stock-based compensation also grew substantially, totaling $1.25 billion for the quarter, a 28% increase compared to the same period last year.
Operating income for the quarter was $21.9 billion on a GAAP basis, up 17% QoQ and an extraordinary 110% YoY. On a non-GAAP basis, operating income was $23.3 billion, reflecting a 17% QoQ and 101% YoY increase.
Net income for the quarter more than doubled, reaching $19.3 billion on a GAAP basis, compared to $9.2 billion a year ago. This also represents a 16% QoQ increase. Diluted GAAP earnings per share (EPS) also saw significant improvement, rising to $0.78 from $0.67 in the prior quarter and $0.37 in the same quarter last year. On a non-GAAP basis, EPS reached $0.81, an increase of 19% QoQ and 103% YoY.
In terms of cash flow, NVIDIA reported $17.6 billion in cash generated from operating activities, more than double the $7.3 billion reported in the same quarter last year. Free cash flow also saw a dramatic increase, reaching $16.8 billion compared to $7.0 billion in the previous year. However, the company used $4.3 billion for investing activities during the quarter, including acquisitions and capital expenditures, and spent $12.7 billion on financing activities, primarily stock buybacks.
NVIDIA’s balance sheet remains strong, with cash and marketable securities of $38.5 billion as of October 27, 2024, up from $26.0 billion at the beginning of the fiscal year. However, accounts receivable grew significantly to $17.7 billion, compared to $10.0 billion in January, suggesting extended credit terms or potential delays in collections as the company scales rapidly. Inventory levels also rose to $7.7 billion from $5.3 billion at the start of the year, an indicator of ongoing production scale-up but also a potential risk if demand moderates.
Looking ahead, NVIDIA provided optimistic guidance for the fourth quarter of fiscal 2025, projecting revenue of $37.5 billion, plus or minus 2%. However, gross margins are expected to continue softening, with GAAP gross margin guidance of 73.0% and non-GAAP guidance of 73.5%, compared to 74.6% achieved this quarter. Operating expenses are expected to rise further to approximately $4.8 billion on a GAAP basis, reflecting ongoing R&D and scaling efforts.
The record revenue underscores its dominance in the AI and data center markets, driven by surging global demand for its Hopper and Blackwell GPUs. However, sustaining this momentum may prove challenging as the company faces narrowing gross margins and escalating operating expenses.
While NVIDIA continues to invest heavily in R&D and production capacity to meet AI demand, its reliance on the data center segment creates vulnerability should AI adoption rates slow or competitors gain ground. To maintain growth, NVIDIA must effectively balance innovation and cost control while expanding its footprint across more diversified revenue streams.
NVIDIA last traded at $145.89 on the NASDAQ.
Information for this briefing was found via the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
